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Aug. 4 — Citigroup Technology Inc. paid 882 employees $1.9 million in back wages after a Labor
Department investigation found the company misclassified them as exempt from overtime
pay, the Wage and Hour Division announced Aug. 4.

The Tampa, Fla.-based company is a subsidiary of global bank Citigroup Inc. The investigation
focused on the company's anti-money-laundering division.

The agency said CTI misapplied the Fair Labor Standards Act's job duties test. CTI
classified analysts in that division as ineligible for overtime under the law's administrative
duties test, but investigators found their job functions didn't qualify them for the
exemption.

WHD Administrator David Weil said in a statement that the case should serve as an
example for other businesses. “Employers must understand that simply paying an employee
a salary does not necessarily mean the employee is not eligible for overtime.”

“The back wages and penalties paid in this case should cause other employers to take
note, and to examine their pay practices,” Weil said. “The Wage and Hour division
will continue its vigorous enforcement of the law, including the overtime regulations,
to ensure that workers take home every penny they have rightfully earned.”

Converted to Overtime-Eligible

According to Citigroup's corporate headquarters, the vast majority of the 882 affected
employees had already been converted to overtime-eligible prior to the department's
involvement.

“We take our commitment to employees very seriously, and we conduct regular reviews
to ensure compliance with applicable wage and hour laws,” Citigroup spokesman Kamran
Mumtaz said in an Aug. 4 statement.

“As part of that process, Citi voluntarily reclassified certain jobs as overtime eligible,
prior to the Department of Labor’s inquiry. We fully cooperated with the Department
of Labor and are pleased to have resolved this matter,” the spokesman said.

DOL did find that 680 of the 882 employees had been reclassified as overtime-elitible
in March 2015, just before the investigation began, agency spokesman Michael D'Aquino
told Bloomberg BNA in an e-mail.

However, the company “did not pay any overtime due” for those employees until after
the WHD investigation, he said. Those workers' job titles and duties didn't change
in March 2015, only their overtime classification, D'Aquino said.

Citi Signs Deal to Prevent Repeated Violations

Following a 2015 WHD investigation that covered a period dating back to late 2013,
the parties signed an agreement in March that requires CTI to review compliance for
all its other analysts and notify the division if it finds additional back wages are
owed.

In addition to nonpayment of overtime, the WHD said CTI did not keep accurate time-keeping
records, another FLSA violation.

The employer also paid the WHD $97,680 as a civil penalty for repeat violations, the
agency said.

Some Workers Affected by New Overtime Rule

The Wage and Hour Division is hoping to bolster workers' overtime protections through
a final rule published in May and taking effect in December.

The controversial overtime
regulation (RIN:1235-AA11)
doubles the annual salary threshold below which workers are eligible for overtime
pay to $47,476, from $23,660.

Many of the 882 Citi employees receiving back pay earned more than $47,476. But “clearly
a good number”
also fell below the new threshold, the DOL's D'Aquino said. Therefore, under the new
rule, they would become automatically eligible for time-and-a-half regardless of their
job duties.

Presently, workers may be exempted from overtime if they're paid at least $23,660
per year (or $455 per week) and perform administrative duties that show exercise of
discretion and independent judgment. But this is not a bright-line test, leading to
varying employer and court interpretations of when the duties standard is legally
applied.

The DOL cited the need to remove this ambiguity when it issued the final regulation.
The agency and other observers have argued that doubling the salary threshold removes
the need for employers to assess job functions when determining overtime status for
millions of new employees.

To contact the reporter on this story: Ben Penn in Washington at
bpenn@bna.com

To contact the editor responsible for this story:
Susan J. McGolrick at
smcgolrick@bna.com

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